Frequently Asked Questions regarding the cell tower leases and the business of dealing with tower companies.
COMMON QUESTIONS WE CAN ANSWER REGARDING NEW SITE PROPOSALS:
How much rent is the Tower Company making off my Tower?
The tenant mix will determine the amount of revenue that is generated by the Cell Tower. Just because you are receiving a certain rent does not determine the value of the tower nor what a market rate is or should be. The ground rent is only one of several factors, which play into the valuation of a cell tower.
Why does the Tower Company want such a long-term lease?
The owner of the Cell Tower wants to lock in their costs for as long as possible. It is NEVER is the best interest of the landowner to extend their lease without careful examination of the cell tower’s ACTUAL value. Never extend based upon your current rents and/or increases to your current rents.
How long should my lease be for?
As a general rule, for as short as possible. Sometimes, in order to get the best terms, you will have to negotiate longer terms regarding a new site. There should be a lot of give and take.
Am I getting the fair market rent?
This can only be determined by an analysis of the site. NEVER use “comparable rents” from near sites, which may be severely under market. Many times, the clusters of cell towers are under market due to many factors and cell tower companies will try to use these as “comparable market rates”. Each site is like a Diamond and needs to be individually valued.
What are the current rates for cell tower leases?
There is no one set rate for a cell tower lease. The market place, competing structures, zoning laws and other factors come into play.
What are the rates for a new cell tower lease?
The market place and competing sites will play into the rates for new sites. A landowner can lose a site if he/she is not careful in their assumptions.
How do I negotiate a cell tower lease?
Two words, very carefully. The worst thing most landowners do is to try and negotiate on their own out of fear of losing their site. All leases are negotiable and contain many items that the tower company will gladly remove if pressed.
Questions regarding technology and changes in the market place:
Cell Tower Leases is the largest expense, second only to payroll for AT&T, Verizon, Sprint and T-Mobile so they are always looking to cut cost. They are looking for ways to eliminate lease expenses always via mergers and technology.
How will this affect my properties value?
Almost in all cases, cell towers will increase property values. It is important to structure your lease(s) to maximize your values. In some cases, poorly structured leases will devalue property values.
What is the “real risk” if any of Radio Frequency Radiation?
There have been no studies to current date, which show any danger of having a cell tower or site on your property. That does not mean that there is not or is any danger.
What happens if the Tower owner leaves or goes bankrupt?
The lease will dictate what will happen to the tower should the tower owner vacate. It is important to get these items included in the lease upfront. If the tower owner should go bankrupt, most likely, they asset will/would be purchased by another cell tower operator.
What about Tax and Insurance issues? Who is responsible for what?
These are all negotiable items in your lease, which should be carefully considered.
How big should the Tower be? How much space do they need?
This is all negotiable to a certain degree. It will depend upon the lay of the land and the market place but these items need to be accounted for in your lease.
How much should I be paid for giving additional space?
This is a negotiable item and several items come into play. How is/are the current tenants, where is the market, how much space and what do they want to do with this space all come into play. This can be a great opportunity to recover lost rents from a poorly structured lease.
How can I get compensated for additional tenants on the tower?
This is a negotiable item, which must be thought out carefully. In some cases, cell tower owners will try to dig their feet in the sand on this item. They like to flat line their costs and give themselves a greater chase for upside growth.
Should I give a perpetual easement or term easement?
This is a VERY negotiable item. Never assume ANY item is set in stone on a lease agreement or buyout agreement. The important thing is to understand what you can and cannot change. They will always tell you they cannot change an item when it actually can and usually does get changed.
How does an easement affect the property in the long-term?
This can have an adverse affect if not negotiated properly. There are many items of ingress/egress easement, which should be weighed carefully.
What should I do long-term with regard to my cell tower lease?
The most important factor should be your capital needs versus risk factors regarding your site. On paper, the cell tower lease revenue is extremely hard to replace. With that said, MANY leases to get cancelled. The most common mistake for landowners is to “ASSUME” their lease is backed by the US Government and is will last as long as the term on the lease. 99% of all leases can be cancelled in 30-days.
Why are the cell tower companies trying to buyout my ground lease?
SBA, Crown Castle and American Tower are large publicly companies trying to protect their assets and improve their EPS by turning your rent expense into a capitalized asset on the balance sheet. They will tell you many different “stories” in order to get you to do what they want. Some less than ethical sales reps will “bend” the truth, using threats to get you to sign their extension or buyout agreement.
Why are the cell tower companies trying to extend my lease?
If you are not willing to sell your lease to them, they will always want you to extend at their benefit to lock your cost in. It is rarely to your benefit to extend and almost always results in you losing a tremendous increase in value for a small payoff of a few thousand dollars to extend for decades.
Questions regarding 3rd party aggregates (buyout companies):
Just because you have been inundated with calls to sell you lease does not mean you are safe and/or sitting on a gold mine. What it does mean is that your site is in a national database, which “dialing for dollars” reps have. They are strictly going down a list of sites looking for people who want to sell their lease. These people make money only on buying a revenue stream. They do not have the ability to “market” your site for additional revenue and will make money only if you sellout.
Who is Tristar?
Tristar is a company, which focuses on buying out American Tower sites. In the past they bought out Crown Castle sites. In some cases, their offer(s) can be appealing but need careful consideration before entering into. In many cases, there are alternatives to this type of proposal.
Can Tristar deliver on their promise of revenue sharing?
There are no guarantees in most all revenue sharing offers. The landowner must be very careful before entering into ANY agreement with any company.
What are the risks associated with the Tristar deal?
There are always risks associated with these types of offers. As in most cases, the more risks there are, the more reward there is. A landowner should weigh the risk/rewards carefully before signing any agreement.
Can Unison Site Management bring additional tenants to my site?
No 3rd party buyout company can bring any additional tenants that a landowner cannot do own their own. Also, only in very limited cases, additional revenue can be had. It is important to understand what they are really offering and what guarantees in writing they are giving.
How do I know I am getting the best price on a lease buyout?
This is not like negotiating on a car or house where you have a readily known market price and comparables. When Landowner negotiates a lease buyout without assistance, it is a recipe for disaster. Cell Tower Sites are individual assets, which carry different “actual” values much like Diamonds. When one sells their lease based upon the rents alone, they are making a huge error, which in most cases will be a costly error.
Why are all these companies calling me to buyout my cell tower lease?
Plan and simple, is all about money. They are calling as many people as possible to find people who want to sell their lease. The number of people calling you has zero to do with the value of your cell tower lease. These people specialize in buying cell tower lease revenue streams, which you happen to be holding.
What are the risks of losing my cell tower lease if I do not sellout?
There are always risks of owner a cellular lease. They number one risks are obsolescence through mergers and acquisitions. There are also risks associated with micro cell towers and newer technologies like Lightradio Technology.
Can I get compensated for a fiber run or a 4G upgrade?
Depending upon your lease, you can get compensated for a fiber run. Also, in many cases, the tower company has violated your existing lease by running fiber without your permission.
How does Lightradio technology affect my cell tower lease?
This is a newer technology, which is just now coming to play. This allows for a much smaller footprint to place a cellular site. This will eliminate many cell sites in the future.
What is a micro cell tower?
Micro Cell Towers are rapidly coming into play to enhance and replace existing cell site locations. They have limited coverage but provide coverage in area, which usually have had poor coverage in the past.
What happens to my cell tower lease if there is a merger?
There are winners and losers when a merger happens. Some sites will get enhanced while others will be eliminated. There is always risks associated with owning a cell tower lease.